Salesforce.com has had a busy month, with its updated Chatter product, the announcement of a looming partnership with VMware for a virtualization offering known as VMforce, and, now, a hefty acquisition. The software-as-a-a-service pioneer today announced its plans to acquire San Mateo, Calif.–based Jigsaw, a data-service provider that has made crowdsourcing its business model. The purchase price is $142 million in cash, with as much as 10 percent in additional consideration based on performance mileposts after the deal is completed.

"This extension is really core to the strategy in sales force automation and represents a new opportunity to expand in a market we currently don't serve," Kraig Swensrud, senior vice president of product marketing for Salesforce.com, tells CRM magazine. The cloud-based B2B data services market, Swensrud adds, has already reached $3 billion.

Jigsaw, named by CRM as one of the Rising Stars of 2009, has a community network of more than 1.2 million individual members. The way Jigsaw works is that any community member can access the database — which currently hosts 21 million employee records across 4 million company listings — and can rack up points helping to maintain data quality and adding new business contacts. The crowdsourcing model enables give-and-take among users — points can be redeemed in the form of access to additional records, but contacts can also be purchased without any editorial contribution.

The model for sourcing content has been compared to that of Wikipedia; the access and payment process to that of iTunes.

"This is a very sticky application," says Altimeter Group Partner Ray Wang. "When all is said and done, you're buying a community." Community contribution and correction of data is what enables Jigsaw to keep records fresh -- offering updates to data as it happens -- rather than cleansing data in a batch fashion.

According to Swensrud, out of Jigsaw's 800 corporate customers, about 70 percent are also Salesforce.com users. "The source of the success we have had with joint customers to date is based on the iTunes model, which is the seamless experience when you combine the data and the application together," Swensrud says. He adds that the two companies have similar DNA -- both born on the Web, providing subscription-based services.

Since its inception in 2003, Jigsaw has grown exponentially -- in membership and in the scope of its data. In July 2009, the company reported that it had doubled its annual revenue in each of the previous four years.

An ever-growing store of data, however, only magnifies a difficult reality: The quality of company information is continually hampered by how quickly it becomes out-of-date. In fact, according to a statistic cited by Swensrud, 70 percent of contact data is outdated after 12 months.

In a demonstration of how Salesforce.com's Sales Cloud can tap into Jigsaw, Swensrud logged in as a sales rep looking to make a sale at Dell, only to be notified that a particular contact's information was out of date. "We can 'Jigsaw' this contact," he said, demonstrating the ability to get a fresh update with a synchronization against the Jigsaw database. He then was able to pipe in additional Dell contacts through a simple, one-click purchase.

"Jigsaw has been a target for awhile because people view Jigsaw kind of like a LinkedIn and other data sources -- but it's more than that," Wang says. "The key asset is that there are members and people that contribute and update information. Instead of going to data bureaus like [Dun & Bradstreet], people are the actual data sources."

Other providers of business data, such as Dun & Bradstreet and Hoover's, offer competitive services, but also use Jigsaw's content to populate their own databases. Swensrud says he doesn't see these partnerships changing. In fact, he says, Salesforce.com is looking forward to the opportunity to partner with data companies that it hasn't teamed with in the past.

Jigsaw has strategic partnerships with CRM and marketing vendors outside of Salesforce.com -- such as one with Oracle. Wang says that while other vendors may no longer be as inclined to opt for Jigsaw now that it's an entity of Salesforce.com, ultimately it's up to the customers. "If you're a customer and you happen to use Jigsaw as well as SugarCRM or RightNow [Technologies] or someone else, odds are you aren't going to leave. You've invested so much and put in the time."

At least one member of the Salesforce.com ecosystem claims to be unfazed by the deal.

“[We're] excited to see Salesforce.com get into the data business, and bring a new level of technology and community-based maintenance to the Jigsaw database," says Chris Golec, chief executive officer of Demandbase, a provider of B2B lead-generation solutions that integrate with Jigsaw and appear on Salesforce.com's AppExchange. "The increased quality and scale for Jigsaw will help make the Demandbase platform even stronger. A tighter linkage between Salesforce and Jigsaw will also make it easier and faster for Demandbase customers to connect their demand on the Web back to their CRM and business contact data.”

Swensrud says that, for now, Salesforce.com plans to maintain Jigsaw's branding, pricing, and packaging, and is taking on the Jigsaw team as a Salesforce.com business unit. Jigsaw's application, which is currently available on Salesforce.com's AppExchange, will be sold in addition to standard Salesforce licenses.

Swensrud says that Jigsaw's use of an open application programming interface will allow existing and new independent software vendors and partners to build applications on top of the expanded system. That, Wang says, happens to be one of the key value points of the deal.

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